The demo is very gimmicky and unrealistic.
The camera technology behind it interested me for a while until I read a few of their papers and determined that they're just using shadows yet again for depth determination. Which is ideal in ideal situations but will diminish greatly if you are for example wearing the wrong clothing or have a poor or low light levels.
It is a great PR victory though. They might even build a box with a couple of cameras and microphones in them for depth capture/voice capture and try and pump out a few gimmicky games. See if they sell. Or more likely see if they sell 360s to otherwise Wii converts...
Hopefully someone with a ton of money and free time is working on better 3D capture technology or taking what we already have forward. Like laser scanning for one example. Because this junk will not hold out under day to day trials.